Metro Bank hits bump in quest for AIRB approval

(Sharecast News) - Metro Bank updated the market on its capital planning on Tuesday, reporting that its application for the Advanced Internal Ratings-Based (AIRB) system in relation to residential mortgages had hit a bump. The London-listed lender said the Prudential Regulation Authority (PRA) had pointed out that more work was necessary before the application could be given a green light.

That, the bank said, implied that the expected approval would not be secured this year.

Metro Bank said it and the PRA had been collaboratively working on the AIRB application.

It said the objective of the AIRB system was to provide banks with a more sophisticated means of calculating their regulatory capital requirements, tailored to the risk profile of their own lending portfolio.

That, in turn, could potentially lead to a reduction in the bank's risk-weighted assets and subsequently, its capital requirements.

"The board retains conviction in the merits of Metro Bank's customer-centric model and strongly believes that there is a significant opportunity set that the company can capitalise on, subject to renewed balance sheet strength," Metro Bank said in its statement.

"The company continues to consider how best to optimise its capital resources to allow it to take advantage of the deposit and asset origination platform that has been built."

At 1005 BST, shares in Metro Bank Holdings were down 7.24% at 94.06p.

Reporting by Josh White for Sharecast.com.